A blog by Joel Barolsky of Barolsky Advisors

Is your practice in the right shape?

In Uncategorized on 14 August 2021 at 12:10 pm

The full text of my opinion piece first published in the Australian Financial Review on 12 August 2021.

The start of a new financial year often coincides with law firm partners updating their budget and doing a strategy health check.

Targets are usually set around revenue, margins and headcount, as well as qualitative indicators such as client service and staff engagement.

This is great, but there is one critical thing missing.

Practice shape is one of the most important drivers of success but seldom gets a mention. By shape, I mean the number, type and roles of practitioners at different levels within a practice team.

David Maister, in his seminal work, Managing the Professional Services Firm, stated, “many factors play a role in bringing goals [of client service, staff satisfaction and financial success] into harmony, but one has a pre-eminent position: the ratio of junior, middle-level, and senior staff.”

Getting it wrong

Poor practice design can be a handbrake on practice performance.

Being too ‘top heavy’ can result in mid-level lawyers leaving to join other firms with better promotion prospects. It could also lead to deep discounting so as to match competitors with more appropriate leverage.

A ‘bottom-heavy’ practice runs the risk of producing lower quality work and creating burnout and stress for those left to carry the load. (Bottom-heavy is also a good description of me after 18 months of intermittent Covid-19 lockdowns 😀).

A ‘missing middle’ often leads to practice stagnation and major financial opportunity costs. Interestingly, many premium firms are facing this issue right now partly as a result of reduced graduate intake in the mid-2010s.

Bad design can also contribute to systemic under-delegation. Partners who hog all the work make their practice far less competitive over time, not to mention sapping the morale of their people.

Succession is also a whole lot easier when the next generation is there trained, ready and waiting.

AFR August 2021

New shapes

The world has changed since David Maister first published his book in 1993. New technologies, providers, channels and delivery platforms have created new design opportunities beyond the traditional pyramid.

With the rocket model, the left and right corners of the pyramid are cut out and most low-level process work is done using a combination of legal technology, paralegals and law @ scale outsource providers. Rocket practice teams generally have fewer entry-level lawyer positions and more legal operations roles.

The hub and spoke model has a partner at the centre of a network that brings in a range of different resources and modular solutions to solve a specific client problem. These resources may include full-time lawyers in their firm as well as advisors from other professional service firms, the bar, data analysts, client resources and third-party software platforms.

The agency shape splits a practice into specialist groups focused on what they’re best at. A great example of this is the award-winning ad agency, Thinkerbell.

Thinkerbell has two groups: Thinkers and Tinkers. To quote their website, Thinkers are “a cross between strategy-types and suity-types, they ask a lot of questions and listen very carefully for the answers. They’re problem-solvers.”

It says Tinkers are “creativey-types and producery-types who pull things apart and put them back together again. They hit things with hammers and fiddle with knobs and buttons. They experiment, and play and build.”

Revisit your design

So, returning to annual budgets and strategic plans, practice leaders need to ask themselves a few critical questions about their current practice shape:

  • does it help or hinder career advancement and learning opportunities?
  • does it fit with the mix and complexity of the work?
  • does it optimise the business model i.e. how the team makes money?
  • what should the shape look like in three years, and in seven years?
  • what alternatives could be considered?

The agency model might not be a realistic alternative at this time, but it’s essential that leaders keep thinking and tinking when it comes to practice shape.

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